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The HKT offer was considered to be in breach of provisions of anti-competitive conduct in that HKT has abused its dominant market position...

  • 1998.08.07

A breach of its licence conditions by Hong Kong Telecom (HKT) has resulted in dissatisfaction and complaints to the Consumer Council.

The Consumer Council has so far received 6 complaints about additional IDD charges billed by HKT.

This followed a recent ruling of the Telecommunications Authority on the offer by HKT of incremental discounts in certain IDD services. The conduct is ruled to be anti-competitive in the Hong Kong telecommunications market.

The HKT offer was considered to be in breach of provisions of anti-competitive conduct in that HKT has abused its dominant market position by engaging in conduct which had the purpose of substantially restricting competition in the relevant market.

The Council noted that TA had on 19th February issued a Statement regarding HKT's other anti-competitive marketing practices and advised HKT to refrain from engaging in similar practices in the future. In this particular case:

  • A TA Direction was issued under s.36B of Telecommunication Ordinance on 1 April 1998 to require HKT to immediately cease offering unapproved or discounted services.
  • A TA Direction was issued under s.36B of Telecommunication Ordinance on 29 June 1998 to direct HKT to comply with the terms of the Direction issued on 1 April 1998 and a TA Notice was issued under s.36C (1) on 29th June 1998 to require HKT to pay a financial penalty of $20,000.

In accordance with the TA's ruling, HKT is invoicing its customers for services used after 1 April 1998 for the difference in the prices they have been charged for certain IDD services and the prices (the full tariffed amount) they should have been charged.

The Consumer Council is supportive of the TA ruling to uphold fair competition and is of the view that the affected consumers are rightly an innocent party as they have responded in good faith to take advantage of the incremental discounts HKT offered in certain IDD services. Only to find out now that through no fault of their own, they are subject to demand for additional payment.

It opens up to serious question the circumstances, under which consumers are apparently being asked to bear the cost of what is actually a penalty intended for HKT for its breach of licence conditions and for the purpose of deterrence to future offences.

Consumers who have taken up HKT's offer between 1st April and 29th June should not, therefore, be asked to comply with HKT's demand for payment. Consumers may approach the Consumer Council for assistance.

The case demonstrates the need for an urgent review of the anti-competition provisions in the Telecom Ordinance and the sanctions available to TA. The Council believes that the maximum fine of $20,000 that TA was able to impose was far too lenient when compared to the commercial benefits a company might have derived through unfair market practices. The TA may also punish breaches of licence conditions by the cancellation or withdrawal of a licence but in practice this is such an extreme step and would cause such disruption that it is not a realistic deterrent.

The TA should have the power to impose fines that reflect the severity of breaches of licence conditions and the benefit gained. Other sanctions should be made available to TA to enable it to impose effective measures as appropriate, such as the right to require companies to publish corrective advertisements.